Taxed

About a month ago, I started attending a multi-session seminar on public policy in Arizona, specifically focused on faith leaders and the role the church can play in creating a more just and equitable state. Yesterday, we had a session n the congresional budget, which inevitably led to a talk about the tax system. Which, if you didn’t know, is pretty terrible in Arizona.

Ok, I’ll admit: I knew it was bad, but after seeing the numbers presented by professional economists and budget people, even I was shocked.

Here’s the graph that really threw me off:

20131025-110216.jpg

(This graph is copied from this report: http://www.itep.org/pdf/whopaysreport.pdf It has a lot of information on all of the states!)

Arizona has a regressive tax system!!!! Meaning that the poorer you are, the larger a percentage of your income you pay in taxes. How does that happen?

Well, we do have a progressive income tax, meaning the more money you make the higher your income tax rate. Only, there have been pushes in the pat few decades to lower the personal income tax, andd even the talk off going to a “flat” tax rate, where everyone would have the same income tax rate. As the income tax rate on the upper tier of the income spectrum has gone down, there has also been an increase reliance on the state sales tax to make up for the revenue lost by the decrease in the income tax rate.

I guess the thinking is that everyone having the same tax rate means an equal society. There are even those who argue that there should be no income tax, that all state revenue (the little that’s needed) should come via the sales tax. It is, after all, the same rate for everyone. But of course, while the initial rate is the same for everyone, the actual amount paid as a percentage of income is way off. On a $100 purchase, I would pay the same dollar amount a someone making $100,000 a year, abut $8 (I think…I actually don’t know the rate). But of course, $8 is a much higher percentage of my personal income that for the person making six-figures.

Anyways, the part of this tax conversation that happened before my eyes glazed over (economics is not my best subject) led me to think about what this tax system says about our state as a society. How did we start viewing equality as measured not by the result of policy, but by artificial numbers that seemingly justify our position? (I mean, everyone does pay the same rate, and that’s pretty fair, right?) Does anyone actually understand the difference between a regressive and a progressive tax system? Or the difference between the income tax and the sales tax?

But the question that I can’t make go away: When did society stop seeing the tax system as a tool for the public good and instead as an assault on individual earners?

I can understand not wanting to pay more in taxes. It does cost more money. But I cannot understand the idea that we should be living in an “every person for themselves” world. What about community? What about social obligation? What about caring for the least of these, or loving your neighbor as yourself, or giving all you have to the poor? Have we traded these in for “well, I earned it?”

I’m not saying the government is the best way to provide for the needs of those in society. (But it’s probably the best one we have. Churches and charities, while admirable, do not have the reach or the resources to provide for everything the government is able to provide) I’m trying to get at what this regressive tax system says about our focus as a society.

Martin Luther King, jr. interpreted the acts of the Good Samaritan this way: while theLevite and the priest passed by the man and asked “what will happen to me if I stop and help him,” the Samaritan asked “what will happen to him if I don’t stop?”

Continuing to decrease the income tax and rely more on the sales tax does a great job answering the first question: what will happen to my wealth, to my earnings, to my things if the tax system doesn’t continue this trend? Christians should be asking the other question: what will happen to those in our society who have less, our neighbors struggling to get by on depreciating wages, who are also taking up a larger share of the tax burden in our state, if we don’t do something to change the system? What will happen to them if we don’t do something?

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2 thoughts on “Taxed

  1. Andrew – good start to a discussion. I agree, I do not support a flat tax or a sales tax for state income tax. I am writing to answer your question about tax as a public good… I began paying serious income taxes in 1981 – as a result of a college education and a professional job. Continuing to do so – until the great recession of 2008, hence the beginning of the “older working women’s unemployment”…. no income has few advantages…
    When one sees the amount the government takes – one starts looking a how the money was spent. I believe the government wastes boatloads of the taxpayer’s money. I stand behind charities benefiting the poor. I have given to help children – St. Jude, to help homeless – food banks, women in domestic violence centers – aging… – well my list is getting far to long. My point is: YES give to charities – and take those donations off your taxes. and always be ready and able to lend a hand to those less fortunate asking/needing your help – be it time or money.

    • Hey Cheryl, I loved your response. I think part of why I wrote this is to try to nuance the conversation about taxes. I think government waste is a problem, and definitely should be talked about. At the same time, I was writing primarily about state taxes, the majority of which go towards k-12 education, AHCCCS (low income health care), and universities. (http://www.azleg.gov/jlbc/14AR/bh20.pdf). I also support giving to charities, but there are few charities that don’t benefit from some form of either passive (tax exempt) or active (government grants, subsidies, etc.) government support in a way that effects the tax code.

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